Tue, OCT18,2011
NEW DELHI - India's federal government has given conditional approval to Coal India Ltd.'s long-awaited proposal to buy unlisted units of listed mining companies overseas, a senior coal ministry official and a senior company official said Tuesday.
The permission is subject to Coal India investing in overseas projects that offer a rate of return of at least 12%, the officials, who declined to be named, said. The state-run company has also been asked to "carefully" evaluate the target companies, the officials said.
Delays in getting approvals have hurt the world's biggest coal producer, as it wasn't able to proceed with its stake purchase talks with U.S.-based Massey Energy Co., Australia's Peabody Energy Corp. or Indonesia's Sinar Mas Group's PT Golden Energy Mines. Coal India sought the approvals in May.
The officials said if the projected rate of return of a target company is less than 12%, the government will consider such proposals on a "case-to-case" basis.
"Normally, projects with both financial internal rate of return and economic internal rate of return of 12% may be taken up for investment abroad," the coal ministry official said.
"However, in exceptional cases where the administrative ministry is of the opinion that such investments are of strategic interests for energy security of the country, the proposal may be referred to the Department of Expenditure for special dispensation on a case-to-case basis."
The Coal India official also said the company recently lost out to India's GMR Group in acquiring a 30% stake in Indonesia's PT Golden Energy Mines due to delays in getting government approvals.
"The mines of the company [PT Golden Energy] had a rate of return of more than 12%," the official said. "Peabody's proposal had a rate of return of less than 8%, so it is out of question and in Massey's case, the new management is yet to come back to us. So, we have practically nothing in hand now," the official said.
Coal India had shortlisted Peabody's Wilkie Creek mine and Massey's Sidney Underground Mines to buy stakes. Massey reached a $7.1 billion cash-and-stock acquisition deal in January with Alpha Natural Resources Inc.
The Coal India official said the company may now seek fresh proposals for investment in overseas companies, a move that's likely to further delay its plans to buy more coal mines overseas and bridge a domestic coal shortage. The company's only overseas reserves so far are two coal blocks in Mozambique.
(sourced Dow Jones Newswires)
NEW DELHI - India's federal government has given conditional approval to Coal India Ltd.'s long-awaited proposal to buy unlisted units of listed mining companies overseas, a senior coal ministry official and a senior company official said Tuesday.
The permission is subject to Coal India investing in overseas projects that offer a rate of return of at least 12%, the officials, who declined to be named, said. The state-run company has also been asked to "carefully" evaluate the target companies, the officials said.
Delays in getting approvals have hurt the world's biggest coal producer, as it wasn't able to proceed with its stake purchase talks with U.S.-based Massey Energy Co., Australia's Peabody Energy Corp. or Indonesia's Sinar Mas Group's PT Golden Energy Mines. Coal India sought the approvals in May.
The officials said if the projected rate of return of a target company is less than 12%, the government will consider such proposals on a "case-to-case" basis.
"Normally, projects with both financial internal rate of return and economic internal rate of return of 12% may be taken up for investment abroad," the coal ministry official said.
"However, in exceptional cases where the administrative ministry is of the opinion that such investments are of strategic interests for energy security of the country, the proposal may be referred to the Department of Expenditure for special dispensation on a case-to-case basis."
The Coal India official also said the company recently lost out to India's GMR Group in acquiring a 30% stake in Indonesia's PT Golden Energy Mines due to delays in getting government approvals.
"The mines of the company [PT Golden Energy] had a rate of return of more than 12%," the official said. "Peabody's proposal had a rate of return of less than 8%, so it is out of question and in Massey's case, the new management is yet to come back to us. So, we have practically nothing in hand now," the official said.
Coal India had shortlisted Peabody's Wilkie Creek mine and Massey's Sidney Underground Mines to buy stakes. Massey reached a $7.1 billion cash-and-stock acquisition deal in January with Alpha Natural Resources Inc.
The Coal India official said the company may now seek fresh proposals for investment in overseas companies, a move that's likely to further delay its plans to buy more coal mines overseas and bridge a domestic coal shortage. The company's only overseas reserves so far are two coal blocks in Mozambique.
(sourced Dow Jones Newswires)
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